Faced with the possibility of working with a potentially bankrupt partner on a facility expansion, the Lee County Solid Waste Division in southwest Florida took the unusual step of assuming full procurement and performance risks for the $119 million project. By executing more than 55 procurement contracts, the division shaved an estimated $5 million to $7 million from the overall price.
The division has been a leader in other ways since its inception in 1989, having created an integrated waste management system that included two incinerators used in an energy recovery component. To limit the amount of material sent to its landfill, the division also does recycling, curbside electronics collection, free mulch distribution, and a household chemical waste program.
In 1990, the division selected Covanta Energy (formerly Ogden Martin Systems) to design, build, and operate a 1,200 ton/day waste-to-energy facility for 20 years. The facility has a ferrous and nonferrous metal recovery system for metals recycling and produces approximately 36 megawatts of electricity.
Despite aggressive recycling programs, by the year 2000 population growth forced the division to look for more disposal capacity. It decided to add a third combustion unit with a boiler and a second turbine generator.
The Florida Department of Environmental Protection issued a Prevention of Significant Deterioration (PSD) permit allowing the facility to incorporate a mass burn grate system manufactured by Martin GmbH. Energy efficiency of the German company's moving grate and combustion-control system is similar to medium-pressure coal combustion units.
Popular in Europe, Martin's system meets strict European Community standards for air emissions similar to the EPA's requirements under the “New Source Performance Standards” that limit the emissions of sulfur dioxide, nitrogen oxides, and particulates. It was the first refuse combustion unit to be permitted under these more stringent standards during the previous 10 years.
Meanwhile, Covanta had filed for bankruptcy. Because the outcome of bankruptcy proceedings was uncertain, the division decided to build the new unit on its own, using Covanta as a design adviser and making other decisions on procurement and contract strategies that differ from the typical contract procedures for similar projects.
A DEARTH OF SUPPLIERS
In addition to the bankruptcy, two other developments complicated the project: Hurricanes created equipment and labor shortages throughout the region and increased costs for critical commodities such as concrete and steel, and many waste-to-energy equipment suppliers had vanished (see sidebar on page 40) since the division bought its first incinerator in 1990.
Suppliers for all equipment were eventually found, but the number of qualified contenders had fallen significantly.
Stoker technology and equipment supply was sole-sourced to Martin; the rest of the equipment was competitively bid using principals set forth in a “Basis of Design” (BOD) document developed between Covanta and the division. Burns & Roe Inc. of Oradell, N.J., was chosen as the architect/engineer to provide engineering, design, and procurement consulting services to the county.
Long lead items were bid and awarded to:
- Mitsubishi Heavy Industries for a 20-megawatt turbine generator
- Babcock Power Inc. for boiler supply and erection
- Alstom Power and Fuel-Tech for air pollution control.
The balance of plant equipment (such as pumps, electrical transformers and switchgear, conveyors, ash-handling components, water treatment systems, cooling tower, heat exchangers, valves, etc.) was specified, bid, and bought by the division.
The general contractor work scope, performed by Casey Industrial Inc., included all foundation work and concrete supply, pilings (where deep foundations were required), structural steel beyond the boiler and APC limits, certain ancillary electrical systems, piping, valves, miscellaneous instruments and controls, and commissioning services.
Following receipt of bids, Burns & Rose and the county negotiated terms and conditions for purchases, and purchase orders were executed by the county.
During the early stages of project development, an interim agreement set forth general principals for going forward. It covered terms of procurement of the Martin stoker equipment, its guarantees and warrantees, and general principals regarding each party's responsibilities during the engineering and design phase of the project.
Subsequently, two additional agreements were negotiated with Covanta covering interim operations of the expansion in addition to project oversight during construction and start up. Upon acceptance of the expansion project, a new operating and maintenance (O&M) agreement would take effect, covering the entire expanded facility.
Under those agreements, Covanta was paid on a fixed-fee basis for project oversight as well as a fee per ton for operations.
Responsibility for compliance with specific environmental performance requirements, including acid gas emissions (HCl and SO2), particulates, dioxins, furans, mercury, carbon monoxide, and CO was specified to lie with respective equipment supplier contracts and guarantees (principally for the air pollution control contract) and the stoker contract. Failure to pass any acceptance testing would lie with the equipment supplier unless it was determined to be Covanta's fault in executing its project oversight responsibilities.
Despite Covanta's bankruptcy problems, the division got the project started in 2004. The expansion began operating in August 2007 with electric synchronization just 11 days later. The combustion unit and air pollution control systems passed full performance and emission testing requirements in November 2007 and continue to operate cleanly and efficiently.
— Sampson is the director of the Lee County Solid Waste Division in Florida.